How Important is Culture in International Business

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  Abstract:International business negotiation is a significant substance in business activity and it will encounter some cross-cultural problems. These problems or cultural differences may obstruct the business negotiation. To see how important is culture in international business, this paper analyzed the cultural differences based on a case study of Sino-US negotiation through the perspective of culture values including values of Results & Relationships, values of individualism & collectivism, values of competition & face, and values towards time.
  Keywords:Cultural differences; Results & relationships; Individualism & collectivism; Competition & face; Values towards time
  中图分类号:H31文献标识码:A文章编号:1812-2485(2008)03-034-010
  
  一、 Introduction
  As the growth of globalization, international trade will be more and more prevalent in international market. International business negotiation plays a key role in international trade, the success of enterprises will heavily depend on the success of negotiations.
  However, it is not so easy to make the negotiation successful, because it takes place across national boundaries. International business negotiation is the use of negotiation to resolve disputes between businesses in different countries. There are a wide variety of factors influencing international business negotiations, such as political and legal pluralism, international economic factors, foreign governments and bureaucracies, instability, ideology and culture. Culture is critical to international business negotiations.
  Every person is a product of his or her cultural environment. Though this provides stability and psychological comfort, it inherently limits one’s understanding of foreign cultures. Many of us tend to make judgments about other cultures in terms of our own culture. We, unconsciously, use our personal cultural background as a guide for judging the actions, views, customs, or manners of others. We may criticize someone because his behaviors are different from ours and sometimes we may be misunderstood in the same way.
  Therefore, understanding the cultural differences is vital to do international negotiation because, whatever the technology and whatever the benefits of a particular product, all business deals are made by people. Understanding cultural differences affects almost every part of the negotiating process. Otherwise, cultural differences may complicate and interfere with our negotiations or make it fail. There are many relevant cultural factors affecting the negotiation including language and communication, values, and decision making process (Cao, 2001). In view of the culture values, which are more complicated and difficult than other two factors, this paper will focus on a Sino-US negotiation case from the culture value perspective to see how important is culture in international business.
  二、 Literature Review
   (一) Previous Research
  In the management literature, there are many discussions of international business negotiations (e.g., Dupont (1991); Ghauri (1983); Ghauri and Usunier (1996); Rao and Schmidt (1998)). Particularly, increasing attention has been given to cross-cultural and marketing approaches to business negotiations since the 1970s (e.g., Graham [1980,] with cases addressing negotiation practices between developed and developing countries (e.g., Fayerweather and Kapoor (1976)), and between Western and non-Western cultures (e.g., Graham and Herberger (1983)). This approach, different from traditional social psychology and communication perspectives on negotiation, emphasizes the relevance of market environment for business negotiations and highlights the influence of political, legal, economic, technological and cultural factors on the negotiation process and outcome.
  (二)Empirical Study
  There are also many empirical studies about international negotiation from cultural perspective. One of which was Graham and his colleagues (Graham, 1993) who have conducted a series of experiments comparing negotiators from the United States and 15 other countries, including Japan, China, Canada, Brazil, and Mexico. These studies each used the same research materials—a version of the buyer/seller negotiation simulation developed by Kim (1977), in which negotiators have to decide on the prices of three products (televisions, typewriters, air conditioners).
  One conclusion from this research, is that business negotiators from different countries appear to obtain similar negotiation outcomes when they negotiate with other people from their own country. However, there were significant differences in the negotiation process in the countries that they studied. In other words, although negotiators from different countries obtained the same outcome, the way that they negotiated to obtain that outcome was quite different. This suggests that the culture of the negotiator appears to be an important predictor of the negotiation process that will occur and how negotiation strategies will influence negotiation outcomes in different
  cultures.
  From these we can see the cultural importance in the international negotiation. Awareness of cultural influence is essential for transferring concepts, technology, or ideas. Next the author will illustrate it in details in view of a Sino-American negotiation case.
  三、Case Study
  (一)The Case
  Ellen Stoddard-Jones, 35, is a sales representative with a multinational data
  systems company headquartered in New York. While most of the company’s international business was conducted in Europe and Japan, China was a growing market for its products. Ellen was scheduled to meet with representative of a very large Taiwanese distributor whose product lines fit those of her company.
   Her first trip to Taiwan had been basically positive but somewhat unsettling. Very little business had been discussed. To a certain extent, though, she’d expected that. She had been told by several more internationally-experienced co-workers that the Taiwanese would undoubtedly spend most of the time establishing a relationship and showing respect for her by providing entertainment. This had indeed been the case. Although she enjoyed some places of interests, she still had found this slow approach to achieving business goals frustrating. She thought, upon her return to the U.S., she followed up with extensive communications regarding developing a contract
   Her second trip had fallen more in line with her expectations as to what a business trip should be, probably because she tried to take a more forceful lead in the negotiations. She had almost a full week of meetings with her primary contact. Furthermore, the Taiwanese clearly recognized the superiority of her firm’s product lines; they praised the reputation of her company and the quality of its products. She was a little surprised when, in speaking about their won firm’s qualifications, the Taiwanese were very modest. By the end of the week, she was convinced that she had a firm agreement for a large contract. True, she had not left with a signed contract. But she understood that decisions in Taiwan probably take longer than in The U.S. and she was convinced of the ultimate success of her approach.
   The goal for the third trip was to return with a signed contract, yet the introductory meeting during the first two days perplexed Ellen. She had thought that the contract was virtually sewn up, but the Taiwanese were not treating it as such. They were re-negotiating major points of the proposal, speaking of needing “ more time” to discuss the contract, bring up far-reaching implications of the contract that were no concern of hers, such as potential effects on their relationship with other suppliers. There was also some confusion as to who exactly had the authority to make the decision to sign the contract. The representative and his colleagues (all much older than she) did not seem to have an acknowledged leader.
   As the meeting progressed, the Taiwanese kept averting eye contact, even when she asked them direct questions. Her words were followed by uncomfortable silence. Although she offered them the best products available, at the end of the meeting, the Taiwanese said that they would study her proposal further. She felt that a company like hers shouldn’t get this kind of treatment. A few weeks after she returned to New York, she received word that the Taiwanese distributors had decided to forego signing the contract. (Zuo, 2003)
   (二) Case Analysis
  This is a typical case of cross-cultural negotiation and represents many cultural differences
  between the Eastern and Western negotiation. It also gives us an insight into how to do successful international negotiation. As mentioned above, the author will make a detailed analysis about the case from the culture value perspective. In Dupont’s (1991) book, he proposed the culture values in a negotiation include “ values towards time” and “ Values towards relationships”. Zuo Xiaoping (2005) pointed out it also include “equality, individualism and collectivism”. On the basis of the previous research, the characteristics of negotiation and Hofstede's value dimensions, the author will analyze the case from four aspects including values of results & relationships, values of individualism & collectivism, values of competition & face, and values towards time.
   1. Results versus Relationships
   Results-cultures (e.g. U.S.) regard ends as more significant than the means used to achieve those ends. Results-oriented societies place a very high value on making progress, which naturally leads to methods by which to measure progress. Measurements that seem logical to Americans may not seem so logical to others, however. The Chinese often marvel at the American businessman for statistics and measurements of qualities they consider intangible. Relationship-cultures (e.g., in China) value the means to an end more than the end itself. Chinese emphasize the means by which one can achieve his end without causing any feeling of disruption or disharmony. Americans emphasize the means of achieving one’s end through skillful
  argument.
   In the case, at its primary negotiation stage, Ellen’s intention of direct going into the topic was contradicted with Taiwanese notion that relationship is first to negotiations. Thanks to others’ reminder, she had some awareness of this and didn’t show great surprise when Taiwanese distributor took her to visit some places of interests. Taiwanese purpose is to establish good relationship and set basis for their future negotiation. In this stage there was no apparent contradiction because ofEllen’s pre-awareness.
   From these we can see, results and relationships orientations are reflected in Sino-US business negotiations. In China, extended social acquaintance and the establishment of appropriate personal relationship are essential to conducting business. The feeling is that one should know one’s business partner on a personal base before transactions can occur. Therefore, rushing straight to business will not be rewarded, When there is a strong relationship, specific outcomes can be worked out. Contracts can be written and signed because relationships. The fact that in the United States is different, they like to rush straight into the business and hope it can get the outcomes on the basis of efficiency.
  2. Individualism versus Collectivism
   Individualism is the concept behind the special importance that is attached to the rights, freedoms and responsibilities of every person. It is “I” conscious,individual rights and freedoms and individual responsibilities are key features of individual philosophy. Collectivism is characterized by a rigid social framework that distinguishes between in-groups and out-groups. People count on their in-group (relatives, clans, organizations) to look after them, and in exchange for that they believe they owe absolute loyalty to the group (Samovar, Porter & Stefani, 2000: 68).
   In the United States, there are strong values regarding independence, freedom and individual equality. Individuals are not necessarily constrained to a particular social class, or location. As a result, individuals strive to achieve personal goals, seek personal autonomy and often prefer to act as individuals rather than as a member of a group. Individuals are being empowered as decision-makers for their groups, divisions or companies.
   The Chinese way of collective decision-making is in sharp contrast with the American way of individual decision-making. When thrust into a situation that demands a decision, American negotiators are often at odds with Chinese negotiators, who come from collective culture. At the negotiating table, differences in this dimension can clearly cause serious conflict.
   At the final stage of the case, Ellen thought they can sign a contract due to the former two-time negotiation, but she had some confusion as to who exactly had the authority to make the decision to sign the contract. The representative and his colleagues did not seem to have an acknowledged leader. And this made her feel uncomfortable. The reason of this is that there’s cultural conflict in decision-making due to the individualism & collectivism orientation.
   Americans too often expect their Chinese counterparts to make decisions right at the negotiating table, and the Chinese are constantly surprised to find individual members of the American team promoting their own positions, decisions, and ideas, sometimes openly contradicting one another. In the eyes of Chinese negotiators, decision-making process is a consensus-based process, which also explains why there are often more than a dozen of Chinese participants around the table while on the US side there are always 3. In addition, due to Chinese emphasis on hierarchy, it is the superiors who make the final decision.
  3. Competition versus Face
   In competition-oriented culture, personal achievements result from successful competition with others. In the United States, where individualism is valued, competitiveness is encouraged as a means for determining the best competitor. Since American people value competition, they have their unique assertive and aggressive communication style in the face of conflicts. In a negotiation, Americans openly disagree and use aggressive tactics such as threats and warnings. They use explicit ways to present their ideas and opinions.
   However, Chinese are more concerned about the “face”. Face is the negotiated public image, mutually granted each other by participants in a communicative event. (Scollon & Scollon, 2000: 35). According to linguist Claire Kramsch, “Members of a cultural group need to feel respected and not impinged upon in their autonomy, pride, and self-sufficiency (negative face). They also need to be reinforced in their view of themselves as polite, considerate, respectful members of their culture (positive face).
  Because Chinese people value face, they tend to create a harmonious environment between each other.
   Different orientations on competition and face will exert great influences on Sino-US business negotiations. Many Chinese negotiators complain about the fact that Americans tend to become very contentious and argumentative in negotiations. And many Americans feel uncomfortable about their uncertain attitude towards some terms. On Ellen’s second trip for negotiation, she presented the real western negotiation style which was characterized with straight into the topic, active attitude, explicit and forceful communication. When Ellen praised the quality of Taiwanese product, they are very modest. Finally, this trip is not as pleasant as Ellen expected. Also, during the process of the final negotiation, the Taiwanese kept averting eye contact, even when Ellen asked them direct questions. Although she pointed out that the deal was very competitively, her words were responded with uncomfortable silence. If they all know other side’s culture value orientation, the negotiation may conducted more smoothly.
  4. Values towards Time
  Edward T. Hall (1976) categories time as monochronic time and polychronic time. Monochronic time characterized as linear, tangible, and divisible. Polychronic time, on the contrary, is characterized by the simultaneous occurrence of many things and by a great involvement with people. Values towards time have a pervasive yet invisible influence on international business negotiation. Differences in punctuality, reflected in everyday negotiation behavior, may appear as the most visible consequences. But differences in time orientation, especially toward the future, are more important as they affect long-rang issues such as the strategic framework of decisions made when negotiation (Cao, 2001).
   In monochronic time (e.g., U.S.), people think “time is money” , so they cherish time very much in negotiation. They place great value on time and emphasize on efficiency. Using time efficiently is a critical is a critical goal and admired measure of sill. Time dominates how meetings are planned. They will tend to be impatient when the process of negotiation slows down. To them, foreigners who do not respect this time orientation are viewed as less professional or less sophisticated than those who do. However, in polychromic time (e.g., China.), people are punctual but they expect you to wait for their group decision, which usually takes time. Sometimes, it may take years for them to reach a decision over a big deal.
   In the case, Ellen hoped to sign the contract at her second trip, but the Taiwan negotiators still talk about the items that had discussed before. At her third trip they still didn’t sign the contract and said they would study her proposal further. And after a few weeks, the Taiwanese distributors said he had decided to forego signing the contract. Although Ellen wished to sign the contract as soon as possible, it takes a long time for Taiwanese negotiator to make a decision which is due to different time orientation.
  四、Conclusion
  Based on the above studies, we can see culture is a critical factor in Sino-US business negotiations and cultural diversity is pervasive in the negotiation which may cause culture shock. The influences of culture values are especially apparent, so understanding cultural differences is vital to negotiators in international negotiation. First, we should know our own culture and then acquire knowledge about the host culture. What’s most important is to learn about cultural adaptation, to be a successful negotiator in Sino-US business negotiations, one should know how to adapt to a different culture. As a result, he can improve his communicative competence in negotiation, and thus achieve satisfying results.
  
  
  【References】
  [1]Dupont, Christophe. International Business Negotiations [M].San Francisco: Jossey-Bass Publishers, 1991.
  [2]Fayerweather, John & Ashok Kapoor. 1976. Strategy and Negotiation for the International Corporation: Guidelines and Cases [M]. Cambridge: Ballinger Publishing Company, 1976.
  [3]Ghauri, Pervez N. Negotiating International Package Deals: Swedish Firms and Developing Countries [M]. Stockholm: Almqvist and Wiksell, 1983.
  [4]Ghauri & Usunier, J.C., editors. International Business Negotiations [M]. Oxford: Pergamon, 1996.
  [5]Graham, John L. Cross-Cultural Sales Negotiations: A Multilevel Analysis. (Ph.D. Diss.) [J]. Graduate School of Business, University of California, Berkeley,1980.
  [6]Graham, John L. The Japanese Negotiation Style: Characteristics of A
  Distinct Approach [J]. Negotiation Journal, 1993(9): 123-140.
  [7]Hall, E. T. Beyond Culture [M].Garden City, NY: Doubleday, 1976.
  [8]Kim, Y. Y. Adapting to a New Culture. Intercultural Communication: A Reader (8th edition.) [M]. L. A. Samovar & R. E. Porter, Eds. Belmont, CA: Wadsworth, 1997.
  [9]Rao, Asha & Schmidt, Stuart. A Behavioral Perspective on Negotiating International Alliances [J]. Journal of International Business Studies, 1998, 29(4): 665-694.
  [10]Samovar Larry A., Porter, Richard E. & Stefani, Lisa A. Communication Between Cultures (3rd edition.) [M]. Beijing: Foreign Language Teaching and Research Press, 2000.
  [11]Scollon, Ron & Scollon, Suzanne Wong. Intercultural Communicaiton: A Discourse Approach [M]. Beijing: Foreign Language Teaching and Research Press, 2000.
  [12] Zuo Enping. Intercultrual Business Communication Readings and Cases [M]. Shanghai Foreign Education Press, 2003.
  [13]曹菱.商务英语谈判 (Business English For Negotiation)[M]. 外语教学与研究出版社, 2001: 206-217
  [14] 左小平. 国际商务谈判中的文化因素[J].商业研究, 2005.
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